IM Needs to Build a Community

Despite their enormous clout, the Big 3 of IM (Microsoft, AOL and Yahoo!) can't make the technology a success among enterprise customers on their own.
Posted February 25, 2003

Colin C. Haley

BOSTON -- Despite their enormous clout, the Big 3 of instant messaging service providers (Microsoft, AOL and Yahoo!) can't make the technology a success among enterprise customers on their own.

Systems integrators, software developers and consultants, need to help convince corporate decision makers that the technology is compelling and workable.

"Currently, there is no ecosystem to take existing enterprise infrastructure and integrate it with IM infrastructure," Microsoft executive David Gurle said in his keynote address here at Instant Messaging Planet Conference and Expo this morning.

Another key is investment. Unlike some technology giants, Microsoft does not have a dedicated investment fund, prefering to get involved with companies later in their development, Gurle said. For example, Microsoft recently pumped $51 million into peer-to-peer player Groove Networks.

The Redmond, Wash., firm does, however, regularly consult with venture capitalists to express what applications they would like to see used in conjuction with its new enterprise IM product, Greenwich, due out later this year.

"Startups have agility that a company the size of Microsoft or IBM doesn't have," said Gurle, whose group is readying Microsoft's Enterprise IM offering, Greenwich, for later this year. AOL and Yahoo are working on their own enterprise products.

Jeff Crown, former head of Lycos' venture arm, and currently managing parter of Aqueduct Partners, said the IM space is similar to the Internet in 1995.

"It's still wide open, it's still the wild wild West," said Crown, now managing partner at Aqueduct Partners, a Wellesley, Mass., consulting firm serving small and medium businesses.

So far, the flow of capital hasn't come anywhere near the amount pumped into the Internet space in its early days. This is due partially because some funds have eschewed technology investments after being burned by the Internet bubble as well as a more anemic economy in general.

Crown thinks investors would also like to see some harder numbers about the market potential and ROI of enterprise IM.

To be sure, there are other impediments to the ubiquitous adoption of IM in the enterprise, including a business model that will allow users of the Big 3 to communicate with each other. Gurle, a former executive with a French telecom, said the fear is customer churn, a problem experience by European wireless carriers where interoperability reigns.

A consistent name space, enhanced security protections and standards for authenticating users, are other problems that have been repeatedly voiced at the show.

An encouraging sign, Gurle believes, is that large customers, like pharmaceutical companies to financial services firms, are starting to ask some hard questions about the practical integration of IM.

If these growing pains are overcome, then IM's potential is enormous. The Big 3 know it will go faster and smoother if they don't have to go it alone.

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